Neil
Sarkhel

Institutions — pension funds, insurance companies, endowments, family offices — allocate capital with a long time horizon and serious governance obligations. When they put money to work with an external manager, they are not just backing a strategy. They are backing a business. And they need to be confident that business will still be standing, still be governed appropriately, and still be protecting their interests in ten years’ time.

Having led over 150 investor due diligence processes, I have seen the same mistakes made repeatedly by operators who have strong track records and genuinely good businesses — but who are not yet institutionally ready.

The governance gap. The most common failure is governance. Operators often run their businesses informally — decisions made quickly, documentation light, oversight minimal. This is often what makes them effective as entrepreneurs. But institutions need to see clear decision-making structures, properly constituted boards or investment committees, documented investment processes, and auditable records. The absence of these is not just a red flag; it is often a deal-breaker.

Confusing track record with business. A strong investment track record is necessary but not sufficient. Institutions want to understand the team, the succession plan, what happens if the key person leaves, how conflicts of interest are managed, and how the business will scale. A one-person track record in a two-person business is a concentration risk, not a credential.

Underestimating the timeline. Operators regularly underestimate how long institutional capital raising takes. From first meeting to commitment, twelve to eighteen months is not unusual for a first-time institutional raise. Operators who approach the market needing capital quickly are rarely in a position to negotiate well or wait out a thorough process.

The businesses that succeed in raising institutional capital are those that have spent time building the infrastructure before they need it — governance, reporting, compliance, and a clear narrative around the business, not just the assets. Institutional readiness is not a checkbox exercise. It is a fundamental shift in how you run and think about your business.

When I joined Newcore Capital in 2015 as an early member of the team, the business was at the beginning of its institutional journey. By the time I exited my ownership stake in August 2025, we had built a business with over $800m of assets under management, seven institutional fund raises behind us, and a roster of 120+ investor relationships spanning pension funds, insurance companies, family offices, and high-net-worth individuals.

It was a decade of genuine education. Here is some of what I took from it.

Capital raising is a relationship business, not a sales process. The investors who became long-term partners were those we had cultivated relationships with over years — through consistent reporting, transparent communication in difficult periods, and genuine alignment of interests. The investors who came in quickly on the basis of a strong pitch rarely stayed for a second fund. The lesson: invest in relationships before you need them.

The business and the investments are two different things. Many fund managers are exceptional investors who build mediocre businesses. The fund management business — its operations, governance, compliance, people, and culture — is itself an asset that needs to be built and maintained. Neglecting it in favour of deal-making eventually catches up with you.

Institutional investors are long-term partners, not quarterly customers. The best LP relationships we had were collaborative. Investors who understood the strategy, trusted the team, and engaged constructively in difficult moments were invaluable. Treating investors as sources of capital rather than genuine partners is a short-term mentality that the market eventually corrects.

Exiting a business you have spent a decade building is a strange experience. There is pride, relief, and a strong sense of what you would do differently. I am now in the process of applying those lessons to building something new.

Institutional investors in real estate are often characterised as bureaucratic, slow-moving, and driven by box-ticking. In my experience, that characterisation is unfair and unhelpful. The best institutional allocators I have worked with are thoughtful, sophisticated, and deeply engaged with the managers they back. Understanding what they are genuinely looking for is the starting point for any manager seeking institutional capital.

Strategy clarity above all else. Institutions allocate to real estate for specific reasons — income, diversification, inflation protection, or a combination. They need to understand precisely where a manager sits in their portfolio and why. Managers who try to be all things — opportunistic, value-add, core, pan-European, UK-focused — create allocation confusion. The clearest managers are the easiest to back.

Team stability and succession. Investors are backing people as much as strategies. Key person risk is one of the most common reasons an otherwise strong manager fails to close institutional capital. Demonstrating a stable, capable team with clear succession and shared economics is a genuine differentiator.

Alignment of interests. Co-investment from the management team, fee structures that align with performance rather than AUM growth, and clear governance that protects LP interests — these are non-negotiables for sophisticated allocators. Any structure that suggests the manager benefits at the expense of investors will be found in due diligence.

The managers who consistently close institutional capital are not always those with the best returns. They are those with the clearest strategy, the most stable team, the strongest governance, and the most credible narrative about how they will protect and grow investor capital over a long time horizon. In a competitive market for institutional capital, those fundamentals matter more than almost anything else.